Optimism is the New Black

Dec. 9, 2014
Stop your griping. Turn that frown upside down. If you haven’t heard, when it comes to the U.S. economy and business, it’s hip to be upbeat.

Stop your griping. Turn that frown upside down. If you haven’t heard, when it comes to the U.S. economy and business, it’s hip to be upbeat.

After a long crawl back from the depths of the Great Recession, the NFIB Small Business Optimism Index climbed back to normal range in December, up 2 points to 98.1.

“Expectations for business conditions six months out rose a huge 16 percentage points while expectations for real sales volumes rose 5 percentage points,” said Bill Dunkelberg, chief economist for the National Federation of Independent Business (NFIB). 

The December burst of optimism isn’t translating into small business owners taking on a lot of new hires or making major investments, Dunkelberg cautions, but it’s nevertheless a positive signal for one of the main economic engines of the U.S. economy.

“Unfortunately, the index did not sprint past the average which is typical of a strong recovery before settling back down. Instead it’s been a slow slog just to reach this point,” he said. While he said it was too early to call it a “breakout,” he did declare it “a good sign that comes at a good time for small business.”

Of course, our latest NAM/IndustryWeek Survey of Manufacturers also sounded a very positive note. The fourth quarter survey found that 91.2% of manufacturing executives were optimistic about their company’s outlook for the coming year. That is only the fourth time that measure has been that high since the survey began in 1997.

CFOs, traditionally not the most ebullient crowd, also joined the optimism parade this week. CFOs gave the strength of the U.S. economy an average score of 59 in the latest Bank of America Merrill Lynch 2015 CFO Outlook survey. That was six points higher than the 2014 survey and the highest mark since the recession in 2008.

A small majority (52%) of CFOs said they are optimistic the economy will expand in 2015 and 37% say the economy will at least remain stable. The same majority of chief financial officers said they expect to hire full-time employees in 2015. And 63% said they expect sales growth at their companies in 2015, up from 54% in 2014.

How are the representatives of the dismal science feeling about 2015? Surely, they can fight this tide of happy talk? Well, prepare to be disappointed. In its Outlook Survey released December 8, the National Association of Business Economists said they “expect economic growth to accelerate in 2015,” reports NABE President John Silvia, chief economist of Wells Fargo.

“The NABE panelists’ median forecast is for real GDP growth to measure 3.1% on an annual average basis next year, a marked improvement from the 2.2% growth rate currently expected for 2014,” explains Silvia. “On a Q4/Q4 basis, the panel’s median forecast is for real GDP to climb 2.2% in 2014 and 2.9% in 2015. The Outlook Survey panelists anticipate the solid pace of output growth will be accompanied by continued labor market firming, with nonfarm employment expanding by nearly 220,000 jobs per month next year and the unemployment rate falling to 5.4% by the fourth quarter of 2015.”

I could fill a column with dour economic news (and likely will in the future) in the interest of fairness, but for now, I’ll let you bask in the warm economic rays on the sunny side of the street. Happy Holidays!

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